City of Culver City, California
Agenda Item Report
Meeting Date: 07/23/12 Item Number: PH – 7
CITY COUNCIL AGENDA ITEM: PUBLIC HEARING - Adoption of a Resolution
Confirming the Assessment and Ordering the Levy for the Sewer User’s Service
Charge - Fiscal Year 2012/2013 (Note: Staff Recommendation is to Continue this
Public Hearing to August 13, 2012)
Contact Person/Dept.: Mate Gaspar/PW Phone Number: (310) 253-5602
Fiscal Impact: Yes [X] No [] General Fund: Yes [] No [X]
Public Hearing: [X] Action Item: [] Attachments: []
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification: (E-Mail) Agenda and Meetings – City Council (07/20/12)
Property owners were mailed a courtesy notice on (07/18/12).
Department Approval:
Charles D. Herbertson (07/11/12)
City Attorney Approval:
Carol Schwab (by H. Baker) (07/17/12)
Chief Financial Officer Approval:
Jeff Muir (07/19/12)
City Manager Approval:
John M. Nachbar (07/20/12)
RECOMMENDATION:
Staff recommends the City take no action and continue this public hearing to August
13, 2012.
PROCEDURE:
1. Staff recommends the City Council continue this public hearing to August 13, 2012
2. Mayor seeks motion from City Council to receive and file the affidavits of
publication and posting of notices and correspondence received in response to
the public hearing notices; and,
3. Mayor calls for a staff report and the City Council Members may pose questions
to staff as desired; and,
4. Mayor seeks a motion to open the public hearing; and,
5. Mayor seeks a motion to close the public hearing after all public testimony has
been presented; and,
6. City Council discusses the item and arrives at its decision.
BACKGROUND:
Culver City obtains sewage treatment services at the City of Los Angeles' Hyperion
Treatment Plant through an Amalgamated Agreement with the City of Los Angeles.
(Agreement). The Agreement requires Culver City to pay a proportionate share of City of Culver City, California
Agenda Item Report
the costs of conveyance, operation, maintenance, repair and capital improvements
to upgrade and improve the Amalgamated Sewerage system.
Culver City owns and operates a separate sewage collection system, which is
connected to the Amalgamated system.
Federal law requires that all agencies using the City of Los Angeles' Hyperion
Treatment Plant adopt a system of charges to assure that each property served by
a public sewer pays its fair share of costs for the operation, maintenance, repair
and improvement of the Hyperion Treatment Plant. The “fair share” of each
property is based on its contribution to the system in terms of flow quantity and
sewage strength (biochemical oxygen demand and suspended solids). This is in
addition to the cost experienced by Culver City in the collection, operation, and
improvement of our own sewage collection and conveyance system.
All of these costs are annually determined and presented to the City Council in the
Engineer’s report, in accordance with Section 5.02.035 of the Culver City Municipal
Code (CCMC).
In addition to formulating and adopting a system of Sewer User’s Service Charges,
the City must also select a system for collecting these charges. In 1980, based on
an engineering study and the City Engineer’s recommendation, the City Council
initiated a once-a-year billing procedure for Sewer User’s Service Charges that
places each property owner’s charges on their property tax bill. This method of
collection has proven to be very efficient and provides the lowest cost billing and
collection service for Culver City.
On July 2, 2012, the City Council approved the Engineer’s Report, declared its
intention to order the assessment levy and collection of assessments, and set the
date, time, and place for this public hearing for the Sewer User’s Service Charge.
Unfortunately, due to a communications error, the required published notice for this
evening’s public hearing was not completed in a timely manner. Therefore, staff
recommends the City Council take no action on this item this evening and continue
this item to August 13, 2012.
DISCUSSION:
On May 7, 2012, the City Council approved a professional services agreement with
NBS Government Finance Group dba NBS for an update to the sewer user’s service
charges (SUSC). The scope of work is for NBS to conduct an in-depth review of the
existing SUSC and determine if they are fair and equitable to each customer class in
light of the cost passed on to the City of Los Angeles to treat the wastewater and the
City’s costs for collection and conveyance of the sewage in its own system.
NBS has completed the analysis and determined the following findings: City of Culver City, California
Agenda Item Report
1. The City’s current sewer rates need to be adjusted to collect more revenue from
single family customers and less from other customer classes, particularly
commercial/restaurant customers.
2. The City should collect approximately 60% of rate revenue from base charges
and 40% from its commodity charges based on the classification of current
expenses as either fixed or variable. Currently the City collects 90% of rate revenue
from commodity charges. Base charges are personnel costs (including cost for
maintenance of the City’s sewage collection system), office expense and most of the
administrative charges, and consultant support costs. These costs do not vary
directly with the quantity of sewage produced. Commodity charges cover what the
City pays to the City of Los Angeles for wastewater treatment-related costs, utilities
at the pump stations, and 25% of administrative charges and consultant support.
These charges are more directly tied to the quantity of sewage produced.
3. Existing landscape irrigation credits for residential customers are reasonable.
In addition, NBS prepared a 5-year financial plan/revenue requirement for the sewer
enterprise fund and are based on several factors such as NBS’ recommended
targets for operating, capital and debt reserve balances and the City’s projected
capital improvement program.
The attached Engineer’s report contains a detailed explanation of the rate analysis
and 5 year financial plan. NBS will also conduct a presentation of the Study this
evening. The Study is also attached to this report.
Based on recommendation contained in NBS’ study and Engineer’s report, Staff is
recommending rate reductions for the following customer classes:
Code Customer Class
Proposed
percentage
reduction
102 Multi-Family
200 Commercial/Business:
300 Commercial/Restaurants:
400 Institutional:
600 Special Users
-1% reduction
-2% reduction
-13% reduction
-4% reduction
-8% reduction
City of Culver City, California
Agenda Item Report
Staff is not recommending any rate increases since any proposed rate increase
requires a 45-day public notice under Proposition 218, and there would not be
enough time to submit the sewer charges to the County Assessor’s office in August
2012. The Study recommended an 11% rate increase for single family residences.
Also the Study recommended rate increases of 4% across all customer classes
beginning Fiscal Year 2013-2014 and continuing through 2015-16. In addition, base
charges will be proposed to be adjusted in 2013-2014 to achieve the recommended
60%/40% revenue split. This is explained in detail in the Study and Engineer’s
report.
Pursuant to Section 5.02.035.C of the Culver City Municipal Code (CCMC), any
interested persons may file a written protest with the City Clerk (or withdrawal a
previously filed protest) until the conclusion of the Public Hearing. Pursuant to
CCMC 5.02.035.D, at the conclusion of the hearing, the City Council shall allow or
overrule any objections and modify the report if it is deemed necessary. Adoption of
the proposed Resolution shall confirm the report and the charge against each parcel
shall be a special assessment and lien on that parcel.
FISCAL ANALYSIS:
The fiscal analysis will be provided as part of the presentation of this public hearing
on August 13, 2012.
ATTACHMENT:
1. None.
MOTION:
That the City Council:
Take no action and continue this item to August 13, 2012.